SPM23 - Productization

Software Product Management Organizational Structure and Productization

Lecture 23

Sjaak Brinkkemper

Garm Lucassen

24 October 2014

Outline

• Organizational growth and structures

• Positioning the product manager

• Productization from a service firm to a product business

Growth phases

Size

Large

Small

Age of the organisation

Young Grown

Phase 1 Startup

Phase 2 Survival

Phase 3 Success

Phase 4 Expansion

Phase 5 Optimal

From: Churchill, N.C. en V.L. Lewis (1983), The five stages of small business growth, Harvard Business review, May-June, pp 30-50.

Characteristics of phases

• Startup: first release, first customers, arranging company

• Survival: second release, getting more customers, hiring first employee, create cashflow

• Success: more customers, exposure in market

• Expansion: redefining the company, hiring personnel, internationalization, company exit strategy

• Optimal: customer satisfaction

• Most startups

• Fosbury, Nubiko, Eitri

• AFAS, Quinity, Mendix

• Planon, TomTom

• Exact, Unit4

5

Structuring an organization

6


7


Baan R&D Department

Product Management

Release Management

Processes

Finance/Legal

HRM

Common Architecture

Research

BaanTech

Workflow

Common Technologies

ERP

Service& Project

E-ERP

BackOffice Applications

Financials

CRM

Supply Chain

Application Integration

Emerging Applications

Configuration Management

Product Testing

Multi-Byte

Product Assembly

Documentation and Training

Business Intelligence

Localizations

Product Delivery

Chief Technology Officer

The organizational structure of Baan R&D Department

in 1998; 1500 employees

Acquisitions

Organizational structures

Organizational structures are needed because – Growing organisations need functional specialists

– Management has limits in numbers

Categories:

F: Functional HRM, Development, Sales, Marketing, …

P: Product ERP, Middleware, BIS, Localizations, …

M: Market Large accounts, SME, Public, Banking and Insurers, …

G: Geografic Benelux, Nordic, UK, France, …

Standard F-structure

Board

R&D Marketing Sales Services Support

Investments and profits

Board


- - + + +

S - S + Profit:

Substructures

Board


P-structure Generic, P-structure P-structure P-structure

P-structure G-structure

M-structure

P-type for R&D

• R&D departments are responsible for a product line

• Product Management:

• Functional responsibility

• Liaison with Marketing

• Architecture Board

• Technical responsibility

• Interfacing of products

R&D

mgr

Product 1 Product 2 Product 3 Product 4

Architecture

Board

Product

Management

Discussion

• What is the stage of your assignment company?

• Do you have insight in their organizational structure?

Outline




Position product management

• The positioning of Product Management determines – Responsibilities – Activities – External and internal communications

Five positioning scenarios 1. Within R&D: as overall function

When functional integration of products is essential

2. Within R&D: inside product development teams When products are relatively independent

3. Within Marketing When customer value and market presence are important

4. Partly within Marketing and partly within R&D When customers have complex technical requirements

5. Under the Board When CEO/CTO are heavily involved in product functionality

Organizational variability

Board


Product 1 Product 2 Product 3 Quality

& Delivery

Product

Management Product

Management

Marketing

Communication

Product

Management

Product

Management

Product

Management

Product

Management

Discussion

• What is the position of the product manager in your assignment company?

Outline




Introduction on Productization

• Productization: from project/customer driven to product/market driven business

• IT Service firms have difficulty managing product business

– Project: billable hours, project acquisition

– Product: market share, next release launch

– Spin-off of Acision from Logica

• Earlier study Productization from within one company (Artz et al. 2010)

• Research question

To what extent is the productization process applicable in an IT service firm when transforming from developing customer specific software solutions to standard product software for a market?

Generic view on productization

Towards product organization

Customized Standardized

Product Organization

No Product Organization

Research approach

• Invitation by IT service company

• Case study: theory testing

• 7 products selected from candidate set

• Literature background

• Semi-structured interviewing

• Determination of initial position

• Gap analysis

• Advise to case study firm

• Overall findings

Productization process

1. Independent projects

2. Reuse across projects

3. Product recognition

4. Product basis

5. Product platform

6. a. Customizable product (enterprise solution) b. Standard product (packaged mass-market)

Artz et al (2010)

Two end stages: For some software there is a need for customization in order to integrate software in a customer-specific situation Aspects of productization (Hietala et al., 2004) - Product market - Concepts - Benefits - Positioning - Selling - Marketing

Productization Process 2/2

adopted from Hoch et al., 1999

Degree of standardization

Literature: Dimensions of Productization

Focus dimensions

Dimensions Customized software Standard software

Software Customized software project Standard software product

Business focus

Meeting the customer needs within

budget and time, contractual

fulfillment

Gaining market share

Requirements gathering Gathered from one customer Gathered from whole market

Requirements selection

Select requirements per project

(More or less fixed list of

requirements)

Optical selected subset of requirements

Marketing goals Interaction, relationship and

networks

Product, price, place and promotion (4P’s),

branding and differentiation

Software development

philosophy Waterfall SCRUM agile development

Lifecycle One release, then maintenance Several releases based on market

requirements

Development teams Project focused, people are

assigned to multiple projects

Product-focused, self-managed, Involved in

the entire development cycle

Stakeholder involvement High external, barely internal High internal, low external

Productization process

1. Independent projects

2. Reuse across projects

3. Product recognition

4. Product basis

5. Product platform

6. a. Customizable product (enterprise solution) b. Standard product (packaged mass-market)

Artz et al (2010)

Stage 1: Independent projects

• Independent relations between projects.

• Projects differ in budget, technology, and functionality

Software Custom features


Customer Project 2


Maintenance


Maintenance

Maintenance Maintenance

Customer Project 4

Project Portfolio

Delivery Delivery

Delivery Delivery

Requirements Engineering

Requirements Engineering Requirements

Engineering Requirements

Engineering

Customer Project 1 Customer Project 3

Stage 2: Reuse across projects

• Focus on feature reuse across projects

• More custom than standard





Maintenance


Customer Project 4

Delivery

Delivery Delivery

Customer Project 2

Standard features

Standard features

Standard

features

Customer Project 4

Project Portfolio

Maintenance

Delivery


Standard features

Requirements E ngineering

Requirements Engineering Requirements

Engineering Requirements Engineering

Stage 3: Product recognition

• Shared features between projects

• More standard than custom

• Introduction of portfolio management

Software Standard features


Customer Project 2


Maintenance


Maintenance

Customer Project 1



Custom features

Custom features

Custom features

Custom features

Delivery Delivery Delivery Delivery

Product Portfolio





Portfolio management

Stage 4: Product basis

• Generic product platform

• Introduction of product roadmapping

• Customer specific maintenance



Customer Project 2


Maintenance


Maintenance

Customer Project 1



Custom features Custom features Custom features Custom features

Product Roadmapping

Delivery Delivery Delivery Delivery





Product PortfolioPortfolio

management

Stage 5: Product platform

• Increasing generic product platform

• Introduction of requirements management

• Requirements gathering based on market trends

• Event based customized releases per customer


Product Roadmapping


Customer Project 2


Releases


Releases

Customer Requirements

Customer Project 1

Releases Releases


Custom features Custom features Custom features Custom features

Delivery Delivery Delivery Delivery Delivery

Product Portfolio

Requirements Management





Stage 6a: Customizable product software

• One standard product with small additional customized layer

• Introduction of release planning

• Structured standardized releases

• Customer requests are handled as market requirements

• Product software aiming at selling services



Customer Project 2



Customer Project 1 Customer Project 4 Customer Project 3

Custom features

Releases Releases Releases Releases

Product Roadmapping

Launch & delivery

Launch & delivery

Launch & delivery

Launch & delivery

Custom features Custom features Custom features

Release Planning

Product Portfolio



MarketRequirements

Market Requirements

Market Requirements

Market Requirements

Stage 6b: Standard product • One generic product for all customers and build for a specific market

• Introduction of release planning

• Structured standardized releases

• Software is completely configurable

• Product software aiming at selling licenses

Releases Releases Releases Releases

Product Standard features

Customer Project 2



Customer Project 1 Customer Project 4 Customer Project 3

Market Product


Launch & delivery

Launch & delivery

Launch & delivery

Launch & delivery


Release Planning

Product PortfolioPortfolio

management

Product Roadmapping

Market Requirements

Market Requirements

Market Requirements

Market Requirements

Case studies

• 7 theory testing case studies

• Varying interviewees

• Service perspective (project mgr, delivery mgr)

Potential products

Market sector

Product A Telecom market

Product B Telecom, Transport and Utility

Product C Local government

Product D Utility firms

Product E Oil Companies

Product F Local government

Product G Local government

SPM Maturity Matrix

Focus area 0 1 2 3 4 5 6 7 8 9 10


Market analysis A B C D E

Partnering & contracting A B C D E

Product lifecycle management A B C D E

Product planning

Roadmap intelligence A B C D E

Core asset roadmapping A B C D

Product roadmapping A B C D E

Release planning

Requirements prioritization A B C D E

Release definition A B C D E

Release definition validation A B C

Scope change management A B C D

Build validation A B C

Launch preparation A B C D E F

Requirements management

Requirements gathering A B C D E F

Requirements identification A B C D

Requirements organizing A B C

Maturity results

Focus area Advanced

(2) Emerging

(5) Avg(%)


21,9 14,2 16,4

Product planning 19,3 15,3 16,5

Release planning 45,6 24,7 30,7

Requirements management

41,7 22 27,6

Discussion

• Language and vocabulary problems due to service versus product perspective

• SPM maturity assessment interpreted differently: make SPM more SMART

• Service firm finds Productization difficult due to different business model and culture

• Focus on IP creation and buy-out

Conclusions

• Validation of productization process

• Immaturity of product business inside a service business

• Many advises for service company to arrange product teams

• But then the IT service firm got acquired …

Questions?

SPM23 - Productization

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